Avantis Labs raises $4 million in seed round led by Pantera Capital

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Avantis Labs raises $4 million in seed round led by Pantera Capital

Avantis Labs, a decentralized finance derivatives ecosystem, has raised $4 million in a seed financing round led by Pantera Capital, the company's co-founder and CEO Sehaj Singh told TechCrunch.

Galaxy, Coinbase's Base Ecosystem Fund, and Modular Capital also participated in the round. The capital will be utilized to develop Avantis, a perpetual trading and market-making protocol.

Perpetual contracts allow traders to forecast the value of an asset without ownership, meaning that they don't have an expiration date and can be held indefinitely.

DeFi perpetual protocols focus mainly on trading cryptocurrencies, rather than traditional assets like forex or commodities. In recent months, there has been a surge in demand for more real-world assets to link the traditional financial market to the DeFi world and leveraged trading.

But many RWAs that are available on-chain through DeFi protocols are offered to accredited institutions, not everyday traders. Avantis will allow forex and commodities to be hedged and traded on-chain without the need for tokenization, Singh said.

Pyth and Chainlink, two of Avantis' trading engines, are powered by oracles from Pyth and Chainlink, which are low-latency and aim to provide traders with better prices across centralized and decentralized financial markets. The platform is being developed on Optimism Superchain, a chain network built using the OP Stack, and uses USDC stablecoins as a currency for trades on its protocol.

In the third quarter of this year, Avantis launched its private testnet phase on Base's blockchain with initial offerings of bitcoin and ether perpetual trading. It will launch its mainnet in the first quarter of 2024 and roll out general access afterward.

Its waiting list has about 90,000 applicants, but it started onboarding about 2,500 people this weekend, Singh said. It will not be operating in the U.S. or any OFAC-sanctioned countries unless it can get approval to operate as an exchange under a CFTC license, he said.

The protocol aims to provide institutional and retail investors with the ability to trade crypto and RWAs with up to 100x leverage on its decentralized exchange. It aims to give these traders and liquidity providers better DeFi derivative-trading and market-making infrastructure as well as a capital-efficient composability that's scalable, the company said in a statement.

Orderbook-based derivative protocols have minimal trading opportunities for non-crypto asset classes, which makes composability a generally 'untapped' area. The DeFi space has been limited to mainly crypto assets.

Avantis will be available for live on the mainnet with bitcoin and ether and three pairs for foreign exchange, the pound, JPY and the euro. Over time, it will add more cryptocurrencies as well as exotic forex pairs like INR andUSD and commodities like gold, silver and crude oil, Singh said.

Avantis has a larger roadmap to expand its protocols' abilities beyond perpetual trading, with plans to begin working on an options engine by mid-nearly next year.

Singh said he was told by his lawyer that it was a difficult decision to make. Beyond that, Avantis' next frontier products can range from 'on-chain casino' to leverage vaults, he said.